Reader Story: From recession to best financial shape of my life

This guest post from William Cowie is part of the “reader stories” feature at Get Rich Slowly. William has contributed to ConsumerismCommentary.com, BudgetsAreSexy.com and other personal finance blogs. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want submit your own reader story? Here’s how.

Fresh out of college in South Africa in 1971, my goal was to be CEO by age 30. I actually accomplished that and the future looked great. What could possibly go wrong?

The company I worked for got sold. Because I was one of a few insiders who was granted equity, the sale brought my wife and me a nice little windfall. Add in some property investments, and we were in good shape. As things often go after a buyout, though, the atmosphere at the company changed and we decided this would be a perfect time to take an early retirement. At 30.

Rather than do nothing, I figured I could add some education to my experience, so we came to the States in 1983, where I enrolled in the Ph.D. program at a reputable business school in California.

Strike 1

There I learned about the economic cycle. Apparently not enough to prevent all our investments from being wiped out in the recession of the early ’80s. And when I say wiped out, I mean wiped out, as in flat broke.

Strike 2

Getting back on our feet became a higher priority than higher education, and thus our early retirement ended ignominiously and I got a job as CFO for a start-up. I had never been laid off or fired before, so my nice new job felt safe. Buying a nice house with no money down, we eased back into our pre-retirement lifestyle seamlessly. What could possibly go wrong, right?

My job might have been safe, but that didn’t mean the company I worked for was. Start-ups rarely are. Think of it as a well-paying job on the Titanic. Just like the passengers on the ship, even the officers, I never saw the iceberg until the scramble for the lifeboats.

It’s no coincidence that business failures usually occur when work is hard to find. You’d think someone who’d studied about economic cycles and seen a secure financial life come crashing down before would be prepared the next time round. Wrong again. I discovered all there is to know about home short sales — from the short side. I vividly remember the person buying our house – what a killer deal they got! I started asking myself, “When will you learn?”

Lesson learned

Eventually, things picked up again, as I became a contributor to the unemployment system again (as opposed to a beneficiary). I had learned my lesson. It was indeed possible to retire by 30. Or by 40. The trick, though, was STAYING retired. Small detail, but important.

When you turn 40 “they” say you’re over the hill, and in some sense they’re right. Standing on top of that hill, one does indeed begin to see things in a different perspective.

For us, the retirement thing changed from being a nice little joke to a real concern. We had nothing except the hope of Social Security. And, as Y2K approached, we realized that we probably couldn’t count on that either. Oh, with lots of photographs and memories we had a delightfully fulfilling life, but as someone once said, “They don’t take happiness at the Safeway.” We were going to need real money when we retire. So, we started saving like two little squirrels on steroids.

Not again

As the previous century drew to a close, I was working for a very good friend, Bob. Bob’s business was flourishing. As the local economy heated up, I told Bob to stop expanding , even though his customers were beating his door down. Night after night he’d complain, “I’ve always dreamed of this moment when new customers beat my door down to do business with me. And now you’re telling me to say no? You’re killing me!”

But he listened and got out of debt and stashed away a good chunk of money in a savings account. When the recession came, as it always does, my friend struck gold. As his competitors went out of business, he’d go to their auctions and pick up new equipment for 10 cents on the dollar. But he was even smarter than that: each time he’d chat up the owner and, after commiserating, ask who his best employees were. Bob became the hero: the employees were ecstatic to get a job, and the employer was happy to see his best people taken care of. (Some of those people still work for Bob.) Customers flocked to him because he was a financially sound survivor. Bob became the leader in his field simply by side-stepping the crash of the economy. And so it was that he eventually brought me on board as CFO. The irony of that moment wasn’t lost on me. He listened to my preaching better than I did. He owned a large and successful business and I owned nothing.

Strike 3

But, where there’s time, there is hope. The two little squirrels on steroids kept doing their frugal saving thing, maxing out their 401(k) plans and putting the rest into assorted savings accounts.

The next recession made its appearance as the dot-com boom met its inevitable doom around 2002. This time, Bob was less fortunate. He had invested in a subsidiary in Colorado. Even though his own company was reasonably well managed, the acquaintance who ran the subsidiary racked up losses and created cash-flow drains that put the entire group at risk. Only people who have gone through this know the agony of failure and defeat. We would lose our investment, our reputation and any illusion of competence I might still have had.

But there’s hope

Nobody has ever accused me being the brightest Christmas light on the tree, but after living through three recessions even I eventually got it. I knew in the mid-2000s that we were headed for another recession.

And I knew what we needed to do: keep our assets as liquid as possible, be debt-free and be ready to pounce when the opportunity presented itself.

When the stock market crashed in 2008 and the Colorado business foundered, I was up late at night learning all I could about those new investment opportunities.

My wife called it going to “night school.” To some degree it probably was an escape from the day business, which was increasingly filled with acrimony centered around getting out of debt. As stressed as the day business was, night school was exciting as I learned from Warren Buffett, Motley Fool, Seeking Alpha and IIAA.

What made it more exciting was I had cash to invest and the crashed stock market was bursting with opportunities. It was like shooting fish in a barrel; I could not believe the bargains. Every day I’d learn about another company whose stock had just fallen to ridiculous levels, and I’d just want to buy it. But then I’d hold out in case I’d find an even better deal the following night.

Even in the best of times the media loves to peddle negativity, but those days they were simply flooded with doom and gloom. However, the previous recessions that wiped me out left me with a burning conviction that I am NOT going to miss out on this opportunity. And so, despite all the doomsday media, I resolved to buy.

Biting the bullet

The market was still falling, but I was convinced the five stocks I bought could double over the next two years. The week I jumped in was the week after the market hit bottom.

One Saturday morning, we talked over breakfast about the stark contrast between the failing business and the eye-popping stock market. As it became clear that there was no option but to shut down the business, the inevitable question was: what next?

Why not retire? The more we thought about it, the more the question grew. This time around we were old enough, and this time around we had no debt, other than the mortgage on a reasonably modest house. That meant we could make this one stick.

The exact timing was not our doing, but the preparation was: getting out of debt, denying ourselves to save, and getting liquid when everyone was buying . Even though we had started at close to 50 years of age, we had built up our money fund enough that we could live on it without Social Security. Since I invested in those first stocks, our portfolio has multiplied five times. In just over three years.

If I was smart, we could have retired a lot earlier and started a blog called Retire by 40. Too late now. I guess the good news is that there’s hope for all of us even if we’re not smart. And even if we’re not under 50 anymore.

The key is understanding the big picture of the economic cycle. It can wipe out your best-laid plans. Or it can turbocharge a simple and lean beginning. Ignore it at your peril, or profit wildly from jumping on it.

Why?

I started my new blog to help people who get this, or want to. While at the Fincon12 conference, we all got challenged to define WHY am I doing what I’m doing?

Ben Franklin was wrong: the only sure things are death, taxes… and recessions. I don’t want to see a single person hurt by the next recession — that is totally needless! And it’s not rocket science (if I can learn…).

I want to see a nation taking care of itself by doing the big things right. What’s the point of saving $1.53 on a purchase, and then buying a house that leaves you underwater on your mortgage? But the time to prepare is now. “Then” is too late.

There is hope and you can do it.

Reminder: This is a story from one of your fellow readers. Please be nice. After more than a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are. Henceforth, unduly nasty comments on readers’ stories will be removed or edited.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

Don't miss out - Subscribe to our newsletter for more articles on personal finance.

This is true wisdom. Period. Its a great lesson to everyone. Nothing ever is permanent but I think the real question is how do you really know when the next fall comes. Is it intuition, knowledge or just plain painful experience.

loading....

Alex

Great blog! I have 2 questions:

– How are you hedging your retirement from a market crash since that is where your retirement money is?

– How did you figure out what “enough” was for you?

Thanks!

loading....

Tamara

This post was probably the most interesting and informative post that I have read in the last year! I feel like many of the posts are covering the same topics and using the same strategies to GRS…. More info and strategies pertaining to the stock market are needed!!!

loading....

Adam Hathaway

What a great story filled with many lessons learned. I was under 30 during the 2008 crash but I shifted my entire measly 401k over to 90% stocks around the bottom and I have been reaping the benefits since. With the current market I am still seeing pretty good gains but I am now getting nervous about when the best time to go back to more diversified portfolio.

loading....

mike

Flee Adam Flee. There isn’t much upside before the crash is coming.

loading....

Jay

Is this a shill for new ‘members’? That link to the ‘new blog’ delivered a page where I was required to provide my name and email address.

Is that what this blog has come to? Perhaps a pay for new members situation?

loading....

Lincoln

First, I don’t think anyone can effectively predict how bad a recession is going to be or how long it will last.

Second, it’s either easy (“shooting fish in a barrel” “not the brightest light in the tree”) or it’s challenging (studying all night for a long time, etc.) — but it’s not both.

Third, what was your strategy if the market had continued to crash? Would you have been OK if you had lost everything?

loading....

KSR

Excuse my novel. I’m intrigued by the comments on this post and yours sums it up well. I don’t know about William but for me it’s not about studying all night and it’s not about shooting fish in a barrel. It’s understanding when things are getting too hot and knowing the companies you want to invest in—making a wish list for next time. This past crash is easy. NEON signs via reporting and books shouting out—if you were reading it right. The commercial media won’t give you what you need—don’t bother—they are there as infomercials to sell. So, to concentrate on dot-com would be more challenging. I started investing right out of college…1998. Simple mutual fund assigned by some dude that called himself my financial adviser. Since I didn’t like handing over money and not knowing anything about it, I studied. NO ONE should invest—even in a mutual fund—if they aren’t willing to study. A person should at least be able to understand how a single stock works, what P/E ratio means, what the difference between earnings and revenue reporting is. Basic stuff. If a person doesn’t want to do the work, they should buy bonds and hold a savings. To go beyond that…you study the effects of the economic cycle. What sectors to hold at different times. I’m not going to get too heady here, I’m just trying to tell you that it’s not market timing at all. When you see it heating up, like it did with the crazy dot-com crash—you just wait with wish list in hand. You don’t know how long, but you just wait because one thing is for sure—it will go lower. Take Apple. I wanted Apple so bad when I first started looking at stocks. A friend of mine brought over his new REVOLUTIONARY handheld jukebox=ipod. Stock was at $30 at the time. I waited. After the crash, I got a boatload 1600 shares at $7. Retrospectively, that’s laughable, I know. Same thing with my mutual fund. I bought PRPFX (gold, bonds, swiss francs) when I wrapped my mind around Clinton’s ridding the last important elements of Glass Steagall—late at 2004, but I still hold it today. So, hold a list and wait. The hardest part is knowing when to sell and move into cash. I just sold all (2 weeks ago) my apple stock that was being nurtured and collected over the past 10 years. Hard! I was emotionally attached and knew it could go even higher with time. But, it kept exceeding my targets and I’m in the process of moving to all cash again. Cash to hold onto for my new wish list after the boom. Will I miss out? Yep. But think if you did this over and over again with your index funds even. Held them to the build up (to your target)—moved to cash, buy again after a significant stock market decline, build up to your target and so on and so on. You would only see the upside with minor blips. Not mindless drops only to recover to drop to recover like all index funds have done over the past decade. I left the stock market January of 2008 (meaning I was in cash except PRPFX and AAPL). My stock wish list for this last crash was: MCD, AAPL, V, O, KMP. You can take a look for yourself on how that worked out for me. I bought those stocks and bought back into the market in June of ’09 and am exiting now. Notice how there’s no fire under my butt. I’m leaving willingly because I met all my targets and exceeded expectations (mostly due to apple). No running to the exits, no market timing. Just patience.

loading....

Steve

You have over 1 million dollars from your recent AAPL sale? Why are you wasting your time posting here? I guess you’ve got nothing better nowadays to do besides go around and brag.

loading....

KSR

No Steve. I’m at this site because I like it–well, J.D’s version. I’m preparing to retire and freaked out of mind about it. I’m not bragging nor bored. Just wanted Lincoln to understand that it’s not always about market timers. Take aapl out my comment (cuz that’s serious luck)and you too just may get something out of what I had to say.

loading....

Steve

Don’t get me wrong – if I were in your position that’s what I’d be doing too! 🙂

loading....

Lincoln

KSR, thanks for your comment. I feel that there’s a big difference between researching a company and waiting for the right time (based on fundamentals and metrics) on that particular company versus waiting for a recession. It’s possible the company you are interested in could hit the right price point during a good economy. But I think the bigger issue is that recessions are often the time that people lose jobs and may need that cash, and may not have the patience, reserves, or time to ride out the storm. Especially if you are near retirement age, if you throw everything into a handful of stocks, who knows if the market will recover in time for your planned retirement? Based on your comment, it’s clear that you have done your homework. Based on the original poster’s comments, it seems that he did his homework as well. But that’s the part of the article I found lacking — explaining exactly what homework needed to be done and how to do it.

If it were really that easy, everyone would have got AAPL at $7. And they would have bought more than 1600 shares.

loading....

mike

I wish I had thought about those things out of college. I was more focused on everyday life stuff, but I have been doing what you said with index funds as I would rather diversify my risk. So I buy when low, move to cash when higher like now, focusing on protecting principal. Yes there is more potential upside with individual stocks but also there is more risk the buying a basket.

loading....

KSR

Mike–Yes. What you are doing is smart. But I would just add, or challenge you, to use your indexing instinct and expand on it to broad sectors, I use ETFs. Know when to buy what sectors and hold until a definitive plateau is apparent or your target (as a percentage) is met. I’m sure there are articles in regard to the economic cycle that can explain sectors so it makes better sense to you—rather than this unknown human on the other end of the interweb giving you specifics you don’t know to be trustworthy.

Lincoln, you are right again—in everything you said. Never wait for a recession. You have to be able to distinguish between the “economy” and the “stock market”—not in the same boat though they float the same river. I guess my point was 1) to be cognizant of consumerism around you. What are those kids buying, or in my case, what just blows your mind. I would like to add, I don’t own a single apple device. Typing to you on a cheap Dell. My husband does though. I still get my Birkenstocks used on ebay. Ha! Nasty, I know. 2)Wait it out. This market is a complete fraud right now so when it comes back, I have hopes that it will come back better than ever.

And Steve–no problem. I think that too many times–articles like this offer a broad picture and don’t provide any details for the reader. Which makes them obscure to the average person–leaving question marks all over the place. I stuck my neck out to give a specific insight, that’s all. The whats and whens and why. I’m a pretty lazy invester in comparison to most.

loading....

Kathleen @ Frugal Portland

Your story is great, and really inspiring. I’m a fan!

loading....

mike

The one thing that bothers me about this article is that some one with self professed knowledge in the field really had such a hard time getting to a point of comfort level with their finances. Williiam said in his post above that his wife takes care of everything except investing and debt, well basically he didn’t do a very good job with the investing side of it for 30 years. HIs own admissions indicate he made mistake after mistake and it wasn’t until the crash of 2008-9, where he was able to make some significant headway.
I’m not trying to throw William under the bus here, but the fact of the matter that it took someone who was more knowledgable than most average investors, worked somewhat in the field in different capacities and he was still wiped out multiple time in over 30 years is discouraging.
Contextually I look at that from different views, because he lived in a time where yes there where economic cycles but in general the econoic trend was upward until atleast the last 4 years. So in essence he was able to reboot multiple times and salavage his retirement. This is not the future of Global economics, just as historical performance can not be guaranteed there is no certainty of how the future economic cycle will react. Global workforce dynamics impact on economic cycles can not be predicted since it is all new. Which may mean long term stagnating unemployment and a flatline of cycles.

Most importantly the majority of American don’t take accountability for their retirement, (if you are on this blog you are not the majority) and certainly don’t manage their investments. Also they probably won’t have the chance to participate in long term growth trend with some economic down cycles as William did. They are going to be facing minimal returns, especially when the QE piper comes fors its due, poor job growth, and flat growth for a long period of time. The 0

loading....

William @ Drop Dead Money

Mike, you’re totally correct of course. Nobody ever accused me of being the brightest bulb on the Christmas tree. 🙂

But that’s really the point, isn’t it? If an idiot like me can benefit…

The point actually has 3 parts:

1. There’s hope, even for boneheads. Making (even several) mistakes is not the end of the world.

2. The economic cycle can have a huge impact on your drop dead money, particularly the opportunity to make up for past mistakes.

3. The cornerstone to any financial future is killing debt and saving hard. That never changes.

In the end, each of us are on our own. We can learn from others’ mistakes or learn from our own. All I was trying to do was offer the opportunity to do the former…

loading....

Steve

I’m sure you feel on top of the world for correctly timing the last bottom. But it took you multiple tries to do so. And in between, you had C-level salaries to fund your next shot. Most of us do not have that luxury. Even if market timing is +ev (I am not agreeing that it is, but even if it is), it’s also high variance.

loading....

William @ Drop Dead Money

Actually, Steve, no I don’t. I feel more relieved and grateful that I got it right than anything else. And FWIW the last 10 years were as a business owner, with a MUCH lower salary. (Those were the times I wished I didn’t buy into the myth that owning your own business is a wonderful thing. That exercise COST me several C’s. But that’s another story.) So we actually managed it without the income we would have had if I had just taken another corporate job.

Timing the market is more of a short term concept, related to stock investing. This is a long term and broader view.

And this actually was my first try. (I didn’t think I needed to try the previous times. As I said elsewhere, I never claimed to be the brightest bulb on the Christmas tree, so when you infer I’m not, I can only agree.)

I’m not saying my specific experience can be replicated. I got lucky in some respects, true, but I was unlucky in others.

All I’m saying is: with whatever you have, you can do it damage by ignoring the cycle or you can benefit by paying attention to it. Not just investments, anything. For instance, waiting for a recession to buy a house can pay off big. And you don’t need to be a rocket scientist to know when we’re in a recession.

The point that is anybody can benefit from paying attention to the economic cycle.

That’s it.

It’s a perspective you accept or reject. The results are yours, either way. I’m just sharing how it worked for me, in the hope that at least one person will find this to be of value.

loading....

Steve

How is this not market timing? If you were timing the day-to-day signals, you’d be a day trader, by definition. Are you arguing that day to day = day trader, anything between month-to-month and year-to-year is market timing, and decade-to-decade is a “long-term, broader view”?

loading....

mike

Of course its market timing but I understand what William is saying. Its basically take advantage of buying opportunities the whole Buffet greed-fear thing and it is a valid point. For most people its counterintuitive to but stocks when they you just lost 50% of your money in them, yeah lets buy more.
I personally dollar cost averaged through the last crash and let things come back, but now I am only 20% in stocks, 20% bonds mostly cash and stable value. Dollar cost averaging worked great through the late 90’s not now, so yes you could say I am market timing because due to the extreme measures by the fed the market is artficially inflated. There is no way I am putting my contributions into a mutual fund at $100 that was $50 in 2009 and probably should only be $70 at most now. All new contributions are going to cash, during the next crash I will buy.
There is a more of risk to principal now as there was during the crash and that risk beats out possible future returns.

But Steve you are right about William, most people will not have his opportunities not only to experience the income, level, and knowledge that he was exposed to but also I really don’t believe that we will have the growth cycle experienced from 82-2007 which was fueled primarily with financial shenanigans. I do believe there will be another crash due to QE infinity, debt and globalization but since the Fed will be out of bullets it will take forever to stabilize. If you look at long term economic cycles it isn’t unusual to go through 30 year flat cycles which we may be in now.

loading....

Laura

William’s post speaks to me. I had heard that recessions occur in cycles of about every 8-9 years on average (an internet search turned up http://www.nber.org/cycles/cyclesmain.html which backs up that claim). That made me realize that no matter how things improve after the Great Recession, another one will occur in less than a decade. That means this is the time to be paying down debt and saving for that rainy day. The tide will go out again and, per the Warren Buffett quote, I’d rather not be caught skinny-dipping this time.

Moreover, I am of the opinion that technology has become a game-changer in job creation. Increasingly, jobs being created require high levels of skill, training, and intelligence, and the jobs being destroyed are the semi-skilled and unskilled jobs that the majority of people are suited to do. (I realize how snotty that sounds. I’m not an elitist, I am a realist: if the majority of jobs require “above-average” ability, then “average” folks are not going to be able to do them, at least not without serious reschooling. By its definition, “above-average” means, well, not average.)

I do not think you will see the U.S. averaged unemployment rate drop below 8% again (short of a pandemic with death rates similar to the Black Death), and I do not believe any president can change that as it’s due in large part to technology replacing people in many jobs, something politicians don’t control. I personally think the next recession will see an unemployment average of 10%-14% in the U.S.

(For the record, I’m not a Luddite either; again, just a realist. I see how technology has changed my own job, with software replacing people and requiring higher skills and education to do the work.)

loading....

Laura

Correction to make: “the jobs being destroyed are the semi-skilled and unskilled jobs that the majority of people are suited to do” – that should be are NOT suited to do. By this I mean that the jobs going away are the average ones done by average people; by having job growth occur primarily in “above average” jobs, you would then need all the average people to become above average – which sort of goes against the definition of “average”. Back to lurking. 🙂

loading....

Laura

Should have just lurked – that the majority can do. Had it right the first time. Sigh. Not drunk or tired, just foolish. Really back to lurking.

loading....

CW

I don’t know about dropdeadmoney. Went over to dropdeadmoney.com and FIRST thing it asks you is “YES, sign me up”. WHY should I sign up when I don’t even know what kind of articles are in that blog???? It seems like one of those late “get-rich-quickly” infomercials or maybe just sell my email address to marketers.

loading....

Steve

AND he is posting guest articles on multiple sites.

You don’t have to give away the cow but you have to give us potential milk buyers something to entice us.

loading....

Elizabeth

@William — great post! I enjoyed your post on Retire by 40 yesterday and it was nice to have some back story. Certainly lots to think about.

Right now I’ve been playing wait-and-see with the housing market here in Canada. Our bubble has not burst yet, and I’ve been reading too much Garth Turner! People think I’m crazy not buying a home (condo in my case) because it’s the thing people are supposed to do by my age. I don’t see a home as an investment, but I still don’t want to see tens of thousands of dollars go into an something that’s going to go down in value.

loading....

ricklee

William, thank you for your informative and candid post about your experiences. I shared many of the same elements, and learned the hard too. I was encouraged by your resiliency and dedication to have an eye toward the future.

loading....

Rya @ bulgarian money blog

“…saving like two little squirrels on steroids.” LOL LOL =)))

Great post, William. I think it’s amazing how you two survived through this financial roller-coaster. I am curious – how did that affect your marriage?

From what you wrote, it seems to me that you were the one handling money in the family. Did your wife want anything to do with it? Was she on some level involved in the decision-making process?

loading....

William @ Drop Dead Money

We just celebrated our 40th anniversary and we’re very happily married. We do nothing unless both agree beforehand. Fortunately our values are pretty similar, so there’s rarely been a disagreement.

She doesn’t have a great tolerance for ambiguity and uncertainty (Honey, what EXACTLY is wrong with money under the mattress?) and I’m not great at detail administration (what do you mean, that had to be paid yesterday?). And so we try to focus on our strengths: she takes care of everything except for the investing and the debt. (And fortunately, the latter part of my job description has gone the way of the dodo.)

loading....

Rya @ bulgarian money blog

Thanks for explaining, William, and congrats on your anniversary! I wish you many more decades together 🙂

PS: Lol @ “the way of the dodo”

loading....

Julie

You don’t sound like the typical CFO. As I am one myself, I am speaking from experience.

loading....

Scott Martin

Encouraging story.

There doesn’t seem to be a mention of precious metals in the mix (maybe I missed some posts). Paper currencies seem to have a limited lifespan and have a history of failing. With ZIRP, interest rates will tend to be low until the system can’t sustain them any longer.

There are plenty of things that can go wrong with our debt based, fiat money system. It is good to be prepared for those new fiscal crises coming in the future.

loading....

Peach

I agree it’s really important to save. Many financial tv shows tend to downplay the importance of holding cash in favor of stocks, but it doesn’t help to have overpriced stocks and little cash.

A lot of good tips on saving, both for retirement and future investing in the stock market. Timing and planning is everything. I wish this was taught to high school students! It would give them a great start in managing their finances.

Great article, William.

loading....

Tonya

Fascinating information on a topic we don’t talk about often enough! I lived a year in Johannesburg from 89-90. Lekker tyd!

loading....

Marsha

The smartest thing we did when this recession started was not to panic. It was very hard at times, when each day brought worse and worse news, not to turn everything into cash and bury it in the backyard. Although our retirement savings lost about 40% of its value initially, we didn’t pull out of the market and we continued to invest. Over time, our old investments have rebounded and our new ones have flourished. We know people that sold all in the depths of the market and they’ll probably never completely recover what they had before the recession.

loading....

El Nerdo

Hey, William, are you the William@DropDeadMoney that usually posts here first thing in the morning? If so (I think so), I’ve read your comments about taking advantage of the economic cycle, and I’m happy to see here a full explanation of what you mean.

Excellent article, and thank you for the wisdom. I think it’s time for me to start going to night school too! 😀

loading....

Deb

This is one of the best stories I’ve read on personal finances. However, I’m disappointed that in order to read content on his new blog you have to sign up for email – a real turn off – and I won’t.

loading....

Elizabeth

That was a turn off for me too 🙁 I hate to say it, but the site looks too similar to spam sites I’ve seen. I don’t want another newsletter either — I manage my reading through RSS and social media.

William, would you consider opening up your site? (Though I get it if you want to keep it exclusive.)

loading....

brian

One of the best grs posts EVER!

loading....

CS

Loved this story – please give us more!

loading....

Luke

Market timing is simple… In hindsight.

loading....

Jacq

Really??

Many people predicted the housing / market crash in 2008-9 and the tech bubble in 2000-1 prior to them happening. Some people listened.

loading....

Debbie M

Many people predicted a stock market crash in 1995–it was way overpriced. However, the crash didn’t come until 1999. Selling in 1995 would not have been anywhere near ideal.

loading....

Jacq

Debbie, the market wasn’t particularly overpriced in ’95 considering they’d come off of a return of just over 1% in ’94 and two lackluster years in ’92-’93.

Not trying to nitpick, but the tech crash didn’t occur in 1999. That year saw returns on the S&P of over 20%.

I’m actually not a market timer, I just know enough to know that when oil hits $150/bbl, it’s probably not a bad idea to sell the oil stocks.

loading....

MelodyO

That may be the case, but if you’re buying stocks in solid companies at 50, 60, 70 percent off their usual price, it doesn’t matter if the market has hit bottom or not. It’s still a smoking deal.

loading....

mike

At 40 I am of the same mentalitity as William, having been burned by the stock market and by housing. Being underwater is no fun and I still am working on it, but I have taken more of a role with investments. I have no problem parking in cash when things are due to fed meddling vs fundamentals and buying in the next huge drop.

loading....

Holly@ClubThrifty

William!!!!

I love your story and had no idea of your background. That is awesome. I will think of you totally differently now. Have a great week!

loading....

Tracey H

I wish I had a crystal ball to see the crashes. We invest for the long-term, diversify, etc., but this past decade has really hurt us for retirement planning and the future doesn’t seem so bright either.

loading....

KSR

This stuff is so important and barely touched at GRS. It’s unfortunate, given the reader base that tends to be thoughtful and practical. Too many mindlessly fritter the same amount, month after month, into a buy and hold index fund that hasn’t gotten them really anywhere over the past decade. As those few of us wait for the busts after the booms—we are sometimes seen as un-American (whatever the hell that means) or as gamblers, stock pickers… market timers. Not true. I think we are the epitome of good students, pragmatic, and patient. Okay, with a possible hint of sniper mentality.

loading....

Marcy

Great post! Two little squirrels on steroids-too funny!

loading....

Mrs EconoWiser

Very well written and interesting story. I’m 31 now, so there’s plenty of time for me to “get there”. My husband and I were talking of buying those stocks as well, back in 2008…but we didn’t. Next time, we’ll know what to do!

loading....

Evangeline

I love this post. We all make mistakes but it’s important to learn from them and continue moving forward. I agree with the writer: it’s never too late to prepare for the future. I’ve had some fairly huge financial knocks and I just keep reminding myself I can still ‘get it right.’ Very well written and informative post.

Advertiser Disclosure:
Many of the savings offers appearing on this site are from advertisers from which this website receives compensation for being listed here.
This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.
Editorial Disclosure: This content is not provided or commissioned by the bank advertiser.
Opinions expressed here are author’s alone, not those of the bank advertiser, and have not been reviewed, approved or otherwise endorsed by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program.
UGC Disclosure: These responses are not provided or commissioned by the bank advertiser.
Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Disclaimer: Rates / APY terms above are current as of the date indicated. These quotes are
from banks, credit unions and thrifts, some of which have paid for a link to
their website. Bank, thrift and credit union deposits are insured by the FDIC
or NCUA. Contact the bank for the terms and conditions that may apply to you.
Rates are subject to change without notice and may not be the same at all
branches.

Disclaimer:All information provided on this site is for informational purposes only. GetRichSlowly.org makes no representations as to the accuracy, completeness, suitability or validity of any information on this site and will not be liable for any errors or omissions in this information or any damages arising from its display or use.